'Labor union backs Indosat sale plan'

Dadan Wijaksana, The Jakarta Post, Jakarta

The government should be able to complete the high-profile sale of shares in international call operator PT Indosat to foreign investors this year, after it finally wins support of the labor union.

State Minister of State Enterprises Laksamana Sukardi said that he had met with representatives of the union -- which had previously opposed the sale plan -- at his office on Tuesday, and managed to settle their differences.

"We have spoken with the company's union and management, and everything has been cleared now. The meeting went well," Laksamana told reporters.

He declined to provide details. Attempts to seek confirmation from union leaders were unsuccessful.

The labor union of the state-owned telecommunications firms had previously launched a street rally to protest the government's plan to sell a majority shares in the publicly- listed Indosat on the grounds that the company was a strategic national asset.

The union had even threatened to hold a general strike if the government proceeded with the plan. It also demanded that Laksamana resign.

This created doubts over the Indosat sale plan, which is part of the government 2002 crucial privatization program aimed at raising some Rp 6.5 trillion (US$650 million) in proceeds to help finance the state budget deficit.

The government planned to sell up to a 45 percent stake in Indosat in two stages, first in June where some 14 to 15 percent of the shares would be sold via the stock market, and the remaining 30 percent to be sold to a strategic investor.

The government, which holds 65 percent of the stakes in Indosat, is hoping to raise proceeds of between Rp 4 trillion and Rp 5.1 trillion from the Indosat share divestment.

Besides the much-needed proceeds, the smooth process of the program would also pave the way for a revival of confidence from investors that the country was moving ahead with its economic reform program.

The government failed to implementing a privatization program during the past two years due to various reasons including opposition from legislators, employees and local people.

Elsewhere, Laksamana repeated his intention to consider acquiring Deutsche Telekom's stake in PT Satelindo -- an Indosat subsidiary -- through a right issue, as part of efforts to increase the value of the parent company, before being sold to private hands.

Now that the labor union supports the move, Laksamana said the government was focusing on restructuring Satelindo, so that the target of selling Indosat in the first semester of the year would still be attainable.

"We're aiming to complete it in the first semester, but we'll keep an eye on the momentum and the market situation."

Deutsche Telekom currently holds a 25 percent stake in Satelindo, the country's second largest mobile phone company; the government controls the rest.